Hr & the changing demands of the workforce
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  • 1. cornell HR review CHANGING DEMANDS: THE WORKFORCE OF YESTERDAY, TODAY, AND TOMORROW Matthew Burr & Adriane McGrawHuman resource departments have been chartered with the responsibility of protectingthe intangible assets of their companies. It is the knowledge and skills of the workers thatestablish the true strategic advantage in any firm. In order to retain intangible assets ofhuman capital, HR managers must respond to both the employee’s personal andprofessional needs. Since the mid-1900s workers have been faced with the challenge ofwork/life balance. Most HR departments have responded to this demand by creatingflexible staffing schedules when the position’s tasks allowed. The goal of this paper is topresent the ways HR has served as a strategic partner in retaining employees throughtransitional periods of their lives while increasing productivity and innovation across theentire organization. This is seen through the implementation of flexible policies and howthese policies can be expanded to further meet current business needs.Today, HR departments are faced with the retirement of Baby Boomers, the mindset ofMillennials, and the economic pressures to reduce costs. After analyzing research done inthe field of HR and current business trends, we believe the next strategic step for HR isthe implementation of internal contingent workforce pools to ease the generationaltransition from Baby Boomers to Millennials.I. IntroductionOur research highlights the emergence of work and family balance issues throughout theUnited States beginning in the 1960s and the importance of the work/life balance intoday’s workplace. We have examined four areas: the history of work and familybalance, the changing requirements of the current and future employees, new challengescompanies are facing, and programs companies have implemented to deal with thesechallenges. Technological innovation has provided a more informed and efficient way todo business, but these changes have also produced a new generation of remote workers.Like technology, companies also have to be creative when designing policies andprocedures for this work style. We chose to research flexible work schedules, remoteworkforces, and contingency workers because of the growing need for companies toimplement these practices. Aligning flexible staffing policies to employees canimmensely affect the strategic objectives of the organization.II. HistoryStarting in the 1960s the emergence of two-income earning households presented theneed for a change from the traditional 9-5 workplace to a more flexible work schedule
  • 2. © 2011 Cornell HR Reviewthat allowed employees to address both their home and professional needs. As the rate ofwomen entering the professional workforce increased, and with the economic crash in1971, personnel managers started creating policies that allowed for flexible workschedules in terms of the hours worked. The creation of a flexible work schedule allowedfor the creation of a new work style and redefined “work/life” balance, ensuring that latergenerations focus not only on the growth of their careers but also on the important rolesthey play within the family. The following quote summarizes how the present workforcediffers from that of the mid-1970s and how these changes have only increased the needfor a flexible workforce: Since 1975 to present, the labor force participation of U.S. women with children under 18 years of age has increased from 47 percent to 78 percent. Nearly 40 percent of all professionals and managers who work at major U.S. companies are now women, many who simultaneously juggle caregiving. The U.S. Census Bureau reports that 83 percent of U.S. families are dual earners or single parents with children under 18 years at home. A third of all workers (equally men and women) provide elder care. Fifty percent of all children will live in a single parent family before reaching 18 years. Fathers play a greater role in caregiving and value flexibility more than those of previous generations.1As the data shows there is a need for flexible work conditions to serve the home/workbalance of today’s society with its increasing number of single parents, new roles offathers as caregivers, and the expectations of Millennials and employers for a linebetween work and home.The dot com boom of the 1990s presented new technology which made telecommutingpossible; as a result more companies began offering the ability to work from home. CiscoSystems, Inc., along with other technology companies, have found that using a remoteworkforce not only allows people to better manage their work and family balance, but italso drives innovation and creates a harmonized work environment. Cisco Systems—whose tagline is “The Human Network” – has had 70 percent of their workforcetelecommuting since 2007.2Citrix Systems, Inc. has a “Work Better, Live Better” philosophy, which encourages aremote workforce. Mark B. Templeton, Citrix System’s CEO, explained the benefit of aflexible workforce stating: “At Citrix, we help people work better. That’s what we do, butit’s not why we do it. We do it because as work gets better, life gets better. As people’swork life improves, their personal life improves, and as their personal life improves, theircommunity improves, and the effect continues to ripple outward. The tie between workand well-being has always been at the core of our company.” 3In order to further understand the work environment at Citrix, we interviewed NicholeRhodes, an HRIS Analyst at Citrix Systems, about her experience with the company’sflexible work polices and the ability to work remotely. She summarized her experience in thisway: 2
  • 3. © 2011 Cornell HR Review Working from home is part of the Citrix culture. We refer to it as “remote.” The company has an established policy for this. The policy is for people that primarily work from home. It outlines work equipment, company expenses, home office, expectations, etc. The nice thing about Citrix is office employees can also take advantage of remote access on a casual basis with their managers approval. If I have a doctor’s appointment or want to work from home for any reason all I have to do is clear it with my manager. Our VP of HR lives in Idaho and works remotely. She visits the office about once per quarter. All members of my specific department (HRIS) have at least 1 day a week where they can work from home. Work/Life balance is an important part of our culture. I would say the number one reason for remote work is the products we sell. Our products promote and enable remote access. So we practice what we preach! I also think allowing employees to work remote promotes higher productivity. Management trusts their employees to get the job done, regardless of where or when. We have higher expectations than companies who force a ‘9-5’ office environment. Its a rewarding and fun work environment - work hard, play hard.4The progress made in the last half of the century will only be developed further aschanges in business demands dictate the need for a more flexible and mobile workforce.The Bureau of Labor Statistics (“BLS”) forecasts that in the next ten years the ratio oftraditional workers to contingent workers will shift from the 90-10 ratio of the 1990s andmove towards a 60-40 ratio.5III. Outcomes of Flexible Workforce ProgramsThe implementation of flexible work policies has successfully contributed to theperformance of organizations. Outcomes include, but are not limited to, increasedemployee engagement, productivity, and job satisfaction. Firms are realizing that in orderto remain competitive in the market it is essential that they implement a flexible workenvironment.A recent survey by SHRM (see Figure 1) demonstrates the reasons why 330 mediumsized companies decided to incorporate flexible work arrangements. 6 The United StatesDepartment of Labor also recently recommended that flexible work arrangements bemade for all government employees who would be eligible (i.e. this would not includeeducators, road crews, military, or construction workers). Congress agreed with thesesuggestions and passed the H.R. 1722 Telework Enhancement Act which PresidentObama signed into law on December 9, 2010. This will make roughly 1.2 milliongovernment employees eligible for telecommuting by June 2011, according to the Officeof Personnel Management’s estimates.7Research has shown that when employees are allowed to select their own hours and/orwork environments the employees are more satisfied with both their positions andemployers. The flexible setting allows employees to work during their “peak” hours of 3
  • 4. © 2011 Cornell HR Reviewperformance while minimizing domestic stressors that often distract employees on a fixedschedule. Flexible scheduling also enables employees to set their work around theirclients’ needs. As businesses are becoming more globally centered, this scheduling canaccommodate multiple time zone differences.Employees who engage in flexible scheduling feel that they are trusted by their employerto complete their tasks. Employees who work from home tend to concentrate more onvalue-adding activities during the workday, as their employer does not sense theirphysical presence in the office making the results more important than the process andthe employee is performing in an environment with fewer distractions. Employees whoare able to telecommute often report feeling more productive and entrepreneurial thanwhen they were working on-site. Allowing employees to work from home enables theemployee to construct an environment that is conducive to their particular work needsand style. The connection between productivity, flexibility, and work environment wasfirst demonstrated by Google, Inc. who found that their employees needed to have games,different color schemes, and even different office furniture to work at their highestpotential. Google went on to create “zone” working environments for employees on-siteand allotted funds for “zone” environments at home.A recent SHRM article stated that exempt employees enjoy better mental and physicalhealth than their counterparts.8 While the article did not express the reasoning behind thisfinding, it can be inferred that flexible employees have more time for their physicalhealth if they do not have to commute to work and if they can accommodate activities tobetter fit around their work schedules. Psychologically, employees enjoy being able toadjust their work schedules without feeling like they have to report to management. Forsome employees, altering their schedule can be mentally stimulating, while otheremployees may simply enjoy the freedom of not having to stress if something goes wrongon their way to work as they know they can easily make up the time at the end of the day.Employees are also provided with more autonomy in setting their own schedules—selecting when and how they work—which in turn empowers employees and makes themfeel more accountable.Through the advocacy of flexible work policies, the field of human resources has beenable to address the societal demands for a work/life balance while strategically addressingthe needs of businesses to increase employee satisfaction, motivation, and productivity.Over the past forty years, the idea of a flexible work environment has come to be one ofthe main factors that both attracts and retains employees throughout the entireorganization. Jill Evans-Silman, Vice President of Meador Staffing Services, stated:“…Organizations are seeking to attract a quality workforce, engage our best and brightestemployees, and retain our workforce. There is no argument that flexible workarrangements are a distinct advantage for the savvy employers that have created suchemployee-friendly practices.”9 4
  • 5. © 2011 Cornell HR ReviewIV. New ChallengesThe top challenges facing organizations today are the down economy and risingoperational costs. As businesses are competing on a global platform—and as the U.S. iscontinuing to invest in service-based industries—companies are forced to cut costs.Approximately 60 percent of all costs incurred by a company are tied to human capital. Inaddition, the aging workforce—particularly the Baby Boomer generation—poses a threatto companies in terms of knowledge and leadership loss.The Baby Boomer generation (“BBG”) is also threatened by the economic fallout. Withthe recent crash of the stock market, increased life expectancy, depletion of SocialSecurity, and increased dependents (children staying home longer and approximatelyone-third of all BBG’s report caring for their parents10 ), most BBG’s do not feel that theycan or should retire. According to the Bureau of Labor Statistics, 77 million BBGs willbe reaching retirement age in the next decade and by 2012, 20 percent of the U.S.workforce will be fifty- five or older. Of these Baby Boomers, 8 in 10 say they expect towork into retirement. Of this 80 percent, two-thirds of those surveyed say they would liketo work in a different field/industry than they are currently in. 11There are numerous options available to the Baby Boomers when they look to continuetheir employment. Some independent companies, such as YourEncore, are hiring high-skilled workers (i.e. engineers, architects, and scientific researchers) on a contingencybasis. These companies then sell this labor pool back to companies such as GeneralElectric, Boeing, General Mills, Eli Lilly, and Procter & Gamble on an as-needed basis.Retirees are also returning to college to obtain educational certificates/licenses that willenable them to teach at the collegiate level. Another popular option for retirees is to workfor temporary agencies, such as Aerotek and Kelly Services or to simply take up part-time jobs in their community. Still other professional retirees become independentcontractors often providing consulting services to firms. Unless firms explore differentemployment options for BBGs, a tremendous amount of experience could be lost ortransferred to competitors.HR professionals are able to lead their organizations by merging the needs of both thecompany and the BBGs through the creation of internal contingent labor pools. Currently1.8 percent of the entire American workforce (approximately 2.5 million workers)volunteer to work on an as-needed basis for their employer.12 For the purposes of thispaper, we are only focusing on individuals who have extensive experience working fortheir company and volunteer to be in the contingent workforce pool within thatorganization. We are not looking at external temporary agencies or companies that recruitin the labor market to fill the internal contingent workforce pool.The movement towards creating internal contingent labor pools has been slowly gainingmomentum in the U.S. The Staffing Industry Analysts Group, who supports flexiblestaffing departments, currently provides technical and professional support to nearly1,000 staffing companies in the United States: “Including more than 70 percent of allU.S. staffing firms with $100 million or more in annual revenue, and hundreds of 5
  • 6. © 2011 Cornell HR Reviewindependent, owner-operated companies.”13 Out of these companies, the most notablecontingent labor pool we found is that of Hallmark Cards, Inc. On April 15, 2011 weinterviewed Susan Chamberlain, the current Flexible Staffing Manager for Hallmark,regarding the operations of the pool, impact of the pool on employment relations, and thestrategic advantages that Hallmark has gained since its creation from a companyperspective.14V. Contingent Workforce IllustrationIn the early 1970s, Hallmark noticed a need to establish a contingent workforce policy.Individual departments and/or plants would keep in contact with workers from their unitswho chose to leave the labor force and when there was a need they would call on thoseindividuals. The issue with this system was that filling a position for another departmentwas based on word of mouth. For example, if Accounting had someone on maternityleave and did not have a recent Accounting person enter their pool, then the departmentwould either have to go to other departments (such as Finance) to find temporary labor orlook outside the company.In the 1990s, Hallmark overhauled their contingent labor program and centralized theoperations within the Flexible Staffing Department. Professional, administrative, andother corporate positions are grouped into one flexible labor pool that can be dispersed toany Hallmark location. Currently there are approximately eighty active contingentworkers serving the corporate/administrative needs. Plants within Hallmark still maintaintheir own pools for manufacturing positions as these require a higher level of familiarityand a specialized skill set. Approximately 200 contingent workers are under theindividual plants’ staffing pools. Out of the approximate 300 total employees, 200 areretirees and the rest of the pool consists mainly of parents who desire the flexibleschedules and the ability to stay in the workforce while raising their families.To be part of the flexible labor pool, an individual has to have worked for Hallmark in thepast and must be considered a “top-performer” (determined by looking at pastperformance evaluations). If the pool is lacking a specific type of skill, the HRdepartment may recruit from outside current employees, but again the candidate has tohave past Hallmark work experience. This guideline provides Hallmark’s flexible laborpool a strategic advantage over searching for temporary workers in the labor market orusing an outside placement agency. Any flexible worker at Hallmark knows the culture ofthe company, the structure of the company, and has been trained in the “Hallmark-way”of doing things. It is also costly to train and on-board individuals for temporaryassignments, so by utilizing former employees, Hallmark’s HR leaders are able to attain ahigher return-on-investment per training dollar.Employees enjoy being in the pool because it allows them to establish a more favorablework/balance, keeps them up to date in their field, and they can easily transition back intoHallmark as full time staff if they so choose. Currently most members of the flexible staffhave been in the pool for at least five years and some have been members since the early1990s. The employees are compensated based on their past pay levels. The employeesalso receive a limited benefit package that mainly consists of a stock option plan (granted 6
  • 7. © 2011 Cornell HR Reviewto any employee who works 1,000 hours in a year) and non-retirees can invest in thecompany’s matching 401(k) plan after they have completed 31 days at Hallmark. Fringebenefits include a store discount, on-site gym membership for those working out of thecorporate headquarters, and Hallmark-provided office equipment (including laptops)which employees can use to work from home.The HR department treats flexible employees the same as traditional employees in termsof employment policies. The flexible work staff is evaluated annually by the flexiblestaffing management teams and on a project basis by the managers the individualtemporally works for. Temporary employees must work at least one assignment in a six-month period to remain an active member of the pool. There currently is not a limit onthe number of individuals allowed in the labor pool as it costs Hallmark very little tomaintain pool membership. As Hallmark only pays flexible employees when work needsto be done, the cost of maintaining the pool is offset by the savings from not having torecruit, on-board new staff, or lose productivity while waiting for a position to be filled.The use of flexible labor has also prompted cultural changes within Hallmark. Managersare now looking at work for all employees in terms of what can and cannot be done athome and flexible working arrangements are becoming more and more common for allstaff levels.As Hallmark demonstrates, companies—along with employees—value the benefits ofcontingent workforce labor. The primary benefit to both parties is that with the creationof workforce pools employees are able to stay with their current employer throughtransitional periods in their lives. Employees benefit from this relationship by being ableto stay abreast to changes in their field, develop workforce skills, and maintain currentbusiness relationships while bringing in a supplemental income. Employers benefit bybeing able to reduce labor costs until the employees are needed for a specific project,retain top talent (both in terms of knowledge and leadership skills), and address changingbusiness needs while not increasing permanent headcount.The Baby Boomer generation now makes up a majority of mid-level and executivemanagement positions in the majority of corporations throughout the United States.Losing that level of experience and knowledge could be detrimental to the success of anyorganization. The BBG’s not only want to be active members within the workforce, butare also seeking new challenges and desire to gain new skills. The BLS reports thatapproximately 40.7 million Baby Boomers want to change the type of work/industry thatthey are currently in.15 As HR leaders, designing a contingent work process aligns notonly with the organizational goals but also with the employees’ needs which is necessaryto ensure that the BBG’s knowledge is kept within the firm for as long as possible.Allowing the BBG’s to work in a different field will present a new challenge for theemployee while also stimulating new perspectives on the work process in that specificarea. It provides the organization with a new viewpoint on the department and new ideason how to improve shortcomings. This arrangement allows BBGs to continue to makevaluable contributions to their organization while exploring new projects and developingnew skill sets. 7
  • 8. © 2011 Cornell HR ReviewVI. SummaryThe HR leaders of yesterday saw the challenges employees faced with work/life balance.They implemented the policies and processes that provided greater scheduling flexibilityfor workers to successfully balance the challenges of home and work. These methodshave since been modified and redesigned to offer the employees a greater range ofoptions. With the increased use of technology and the ease of communication, manycompanies allow employees to work remotely from home or from an offsite officelocation. These tactics allow both the firm and the employee to adapt to businessdemands and changing societal demands. Technology not only makes communicationmore efficient but it allows any worker to telecommute globally. The HR policies onflexible scheduling have evolved since the 1960s to serve the changing demands of notonly the American society but also cultures around the world.As history has shown, proactively seeking out new alternatives to allow employees tohave greater flexibility with work/life balance is necessary in succeeding in the changingbusiness climate. Employees are able to work during their peak hours of productivity andin an atmosphere in which they feel more comfortable and perform with more efficiency.The major issue that will soon affect most businesses is retaining top talent/leadership.Allowing flexible schedules, telecommuting, and implementing a contingent workforceprocess will demonstrate an understanding by the organization of the challenges we allface with work/life balance. Employees at firms that offer greater flexibility will create anenvironment in which they are satisfied and willing to work to help the organizationsucceed—thus ensuring talent/leadership is kept in-house and not lost to a competitor.Designing and redesigning policies/processes to manage remote workforces, along withthe ever-changing use of technology, is a focus for many HR professionals. Ensuring thatemployees have the option to work remotely and managing the remote workersappropriately will add tremendous value to the strategic goals of the organization.Reinventing these remote worker procedures will help keep the more talented employeessatisfied and challenged. A contingent workforce system, which allows the BBG’s toremain with their current employers while serving in a new capacity will add value to thecorporation by strategically transitioning the knowledge and leadership qualities from theprevious generations to the new generation of organizational leaders. It also providesemployees with the flexibility and work life balance they desire as they transition out ofthe workforce and into fulltime retirement. HR has the responsibility of strategicallyaligning the flexible workforce with the goals of the organization. The flexiblescheduling of yesterday established the foundation for the telecommuting of today and isthe groundwork that will continue to change tomorrow’s meaning of the words:“workday,” “office,” and “retirement”. ℵAdriane L. McGraw is a student at the University of Illinois Urbana-Champaign whereshe is pursuing a Master’s degree in Human Resources and Labor Relations. Sheobtained her Bachelors of Business Administration from Indiana University ofPennsylvania where she served as president of the school’s Society for Human Resource 8
  • 9. © 2011 Cornell HR ReviewManagement club from 2007-2010. Upon graduation, she will join Ingersoll Rand as anAccelerated Development Program HR participant.Matthew Burr is a student at the University of Illinois, pursuing a Master’s degree inHuman Resources and Labor Relations at the School of Labor & Employment Relations.He previously served as Vice President of External Relations for the Student Society ofHuman Resource Management at the University of Illinois. Upon graduation, he will joinNew Page as a Human Resources Manager. Figure 1. Reasons that Prompted Organizations to Offer Formal Flexible Work Arrangements (Percentages) Source: SHRM (2009). Workplace Flexibility in the 21st Century.1. Kossek, E. & Michel, J. In press. Flexible Work Schedules. In S. Zedeck (Ed.), APA Handbook of industrial and organizational psychology. Vol. 1, Washington, DC: American Psychological Association. Page 6.2. Applegate, Jerry. "What Weve Learned About Telework at Cisco." Inside Cisco IT. Cisco, 31 Jan. 2011. Web. 17 Apr. 2011. <http://blogs.cisco.com/ciscoit/what-we percentE2 percent80 percent99ve- learned-about-telework-at-cisco/>. 9
  • 10. © 2011 Cornell HR Review3. Templeton, Mark B., CEO. "Reaching Out to the Community." Citrix Systems. Citrix Systems, Inc., 2011. Web. 17 Apr. 2011. <http://www.citrix.co m/ English/aboutCitrix/outreach/index.asp>.4. Nichole, Rhodes. E-Mail interview. 11 Apr. 2011.5. Goldsmith, Marshall. “The Contingent Workforce.” BusinessWeek Online (24 May 2007): 31-32. Business Source Complete. EBSCOhost. University of Illinois. 17 April 2011. <http://www.epnet.com>.6. Victor, Justina, dir. "Workplace Flexibility in the 21st Century: Meeting the Needs of the Changing Workforce." Society for Human Resource Management. Society for Human Resource Management, Nov. 2008. Web. 17 Apr. 2011. <http://www.shrm.org/Research/SurveyFindings/Articles/Documents/09- 0464_Workplace_Flexibility_Survey_Report_inside_FINALonline.pdf>.7. Leonard, Bill. "President Signs Federal Employee Telework Legislation ." Society of Human Resource Management. 10 Dec. 2010. Web. 17 Apr. 2011. <http://www.shrm.org/hrdisciplines/staffingmanagement/Articles/Pages/FederalTelework.aspx>.8. Miller, Stephen. "Workplace Flexibility Valued by Low-Wage Workers." Society for Human Resource Management. 23 Feb. 2011. Web. 17 Apr. 2011. <http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/LowWageFlex.aspx>.9. Victor, Justina, dir. "Workplace Flexibility in the 21st Century: Meeting the Needs of the Changing Workforce." Society for Human Resource Management. Society for Human Resource Management, Nov. 2008. Web. 17 Apr. 2011. <http://www.shrm.org/Research/SurveyFindings/Articles/Documents/09- 0464_Workplace_Flexibility_Survey_Report_inside_FINALonline.pdf>.10. Kossek, E. & Michel, J. In press. Flexible Work Schedules. In S. Zedeck (Ed.), APA Handbook of industrial and organizational psychology. Vol. 1, Washington, DC: American Psychological Association.11. DeVaney, Sharon A, and Sophia M Chiremba. "Comparing the Retirement Savings of the Baby Boomers and Other Cohorts." Bureau of Labor Statistics. 16 Mar. 2005. Web. 17 Apr. 2011. <http://www.bls.gov/opub/cwc/cm20050114ar01p 1.ht m>.12. Contingent and Alternative Employment Arrangements. Washington, D.C.: Bureau of Labor Statistics, Feb. 2005. Print.13. "About Us." Staffing Industry Analysts. Crain Communication, Inc., 2011. Web. 17 Apr. 2011. <http://cwsconference.com/>.14. Chamberlain, Susan. Phone interview. 15 Apr. 2011.15. DeVaney, Sharon A, and Sophia M. Chiremba. "Comparing the Retirement Savings of the Baby Boomers and Other Cohorts." Bureau of Labor Statistics. 16 Mar. 2005. Web. 17 Apr. 2011. <http://www.bls.gov/opub/cwc/cm20050114ar01p 1.ht m>. 10